The Law and Economics of Takeovers: An Acquirer's Perspective by Athanasios Kouloridas
| DOI | http://doi.org/10.1111/j.1468-2230.2009.00780_3.x |
| Date | 01 November 2009 |
| Published date | 01 November 2009 |
| Author | John Townsend |
bene¢t of so doing i s that we have an overview of all the di⁄culties and opport u-
nities latentwithin the enterprise.Some of those di⁄culties are great anddemand
rather more attention than this volume gives them. Yet what thebooks delivers is
a clear map of a large research project, some aspects of which are drawn in some
detail, as readers will ¢nd on examining chapters 5^7, some of which are still
rather vague. It is therefore an assuredly helpful contribution to the ¢eld.
Will ia m Lu cy
n
Athanasios Kouloridas, The Law and Economics of Takeovers: An Acquirer’s
Perspective
,Oxford: Hart Publishing, 2008, 304 pp, hb d50.00.
This book is a timely study of the regulatory regime applicable to takeovers in
UK capital markets from the perspective of the acquirer.The starting point for
the study is the counter-intuitive premise that the acquirer’s shareholders tend to
su¡er losses in value following a takeover, or at best make no loss. This strange
conclusion is suggested by the empirical research of economists, on which the
author, a lawyer, builds. It is counter-intuitive because a takeover ^ friendly or
hostile ^ is designed to enhance shareholder value, both for acquirer and target.
Although counter-i ntuitive, the proposition that takeovers are destructive of
shareholder value has become at least acommonplace of popular wisdom due to
the recent intense discussion of the Royal Bank of Scotland. In October 2007,
RBS participated in the consortium which engaged in the hostile takeover of
Dutch bank ABN Amro.The bidder consortium may or may not have overpaid
for the target bank: what is beyond doubt is that RBS subsequ ently had to go to
the markets to seek new capital.Worse, RBS was then e¡ectively nationalised by
the British Government in January 2009, which may or may not be some indica-
tion of its solvencyat that time. Sir Fred Goodwin, chief executive of RBSat the
time of the takeover, has become a public hate ¢gure. So the subject of this book
does not concern only corporate lawyers: the regulation of corporate takeovers has
signi¢cant social and political implications, which now concern everyUK voter.
Kouloridas seeks an explanation for bidder overpayment through an applica-
tion of law-and-economics academic literature to legal rules and regulatory prin-
ciples.The book is based on the author’s PhD research, and includes a foreword
that commends it by the author’s supervisor, Professor Paul Davies. Dr Koulori-
das’s book adopts much of the critical vocabulary employed in his supervisor’s
writings ^ so a takeover is more consistentlycalled,‘acontrol transaction.’It is also
interesting that a Greek academic and practising lawyer from a civilian back-
ground should exami ne the position in the UK. Yet UK capital markets generated
more takeovers than US during the 1990s and 2000s, despite being a smaller
market. Moreover, as even conversations in the Dog and Duck are now so
informed, the UK until recently led the world in encouraging takeovers in the
context of private equity, fu nded by cheap debt willingly provided by banks.
n
Law School, Universityof Manchester
Reviews
105 3
r2009 The Authors. Journal Compilationr20 09 The Modern LawReview Limited.
(2009) 72(6) 1035^1056
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